How it works (Example):

Okun's law, however, only applies to the U.S. economy and only applies when the unemployment rate is between 3% and 7.5%.

Why it Matters:

Okun's law reinforces the notion that a country's output depends on labor. It is also a way to measure the effectiveness of monetary policy. Although the law only applies in the United States, the concept applies in all economies (that is, when more people have jobs, the economy is stimulated). Accordingly, a 1% change in employment may result in a different degree of increased output in other countries.

CONTENT LIBRARY

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